Canberra tries to claim $1.5bn back from poor

The Federal Government is claiming back close to $1.5 billion in welfare payments from more than a million low-income earners, aged and disabled pensioners and students.

Opposition family and community services spokesman Wayne Swan said few Australians would realise until they got letters from Centrelink just how many battlers were being targeted.

He said that while it was public knowledge that several programs to track down and reclaim overpayments were under way, it was only when these projects were lumped together that the scale of the impact on society became clear.

Mr Swan said that on the face of it, reviews were being carried out to prevent rorting and to catch welfare cheats.

"They are trying to create the impression it's all being done in the name of weeding out rorting while cultivating a blame-the-victim mentality," Mr Swan said.

"What they are doing is changing the rules of disability when it comes to carers, and when it comes to pensioners and students they're simply trying to recover debts which have accumulated because of (Family and Community Services Minister Amanda) Vanstone's incompetence."

Senator Vanstone said no one entitled to money was asked to give it back.

"The only people asked to pay back money are people who have received more than their share, more than someone else in the same circumstances," she said.

Senator Vanstone said the system was generous but with about 6.5 million people on some kind of payment the Government could not afford to be soft about compliance. If everyone in the system received an extra $5 a week that would cost about $10 billion over the four-year budget period, she said.

Mr Swan said many people had been caught in a system that was "unnecessarily complicated" and others had fallen victim to mistakes made by Centrelink. "John Howard doesn't defend the battlers, he creates them," he said.

The Government had set out to claim back $1.2 billion over two years in family tax benefit payments from about 1.4 million families. Last year Centrelink identified 643,000 overpayments averaging $870 per family.

"The ombudsman has described these debts incurred by families as being largely unavoidable," Mr Swan said. "They arise from the Government's insistence that families estimate their income one year in advance."

Those most at risk were families whose income was higher than the estimate they made at the start of the year and that fall into the so-called "taper range".

Centrelink says that if a taxable income is more than $31,755 this financial year the payment is reduced by 30 cents for each $1 above that amount.

"Battling families who work overtime and parents returning to the workforce after the birth of a child are hardest hit.

"If you're earning in the $30,000-$40,000 bracket you're more likely to be caught by this."

In the documents issued with the 2003 budget, the Government revealed there would be reviews of payments to 172,000 aged, disabled and parent pensioners over the next four years at the rate of 43,000 a year. Each could be asked to repay any overpayments that showed up.

The Government estimated $89.3 million would be collected over the four years.

Those likely to be caught in this net were pensioners who earned more than $3120 a year ($120 a week) over and above their pensions.

Others targeted were students on the youth allowance, with the Government planning to recoup $80 million over four years. Labor estimated 40,000 to 50,000 students could be investigated each year.